The US dollar moved stable against the two major currencies in an early trading this morning. The index of USD (DXY) is now around the level of 92.67 or 0.04 percent stronger. 

It is especially if you compare it with the open daily level happened in the market. Against the Euro, the dollar chalked up its biggest weekly gain in three weeks on Friday. 

The EUR/USD pair was observed to weaken by 0.05 percent in the range of 1.1802 this morning. However, the US Dollar is still powerless against the Australian currency.

The AUD/USD was still seen strengthening 0.05 percent at 0.7359 when this news was written. The movement of the American Dollar reflects the wary attitude of market participants.

The Tapering Plan is also Highlighted 

That concern is especially ahead of the release of the Inflation data this week in the America. The Continued rise in inflation will certainly support the outlook for economic recovery.

That also supporr the tapering the Fed in the near term. But if inflation growth is less convincing, then doubts about tapering will re-emerge and weaken the dollar.

The other things highlighted by the investors are about the tapering plan development by The Fed. That institution planned to reduce the monthly obligation purchase or tapering this year. 

Philadelphia Fed President Patrick Harker recently confirmed that the central bank's decision to tapering was unchanged. It is even though the America’s economy was still overshadowed by a pandemic slowdown. 

The Market Risk Interest is Fading

A significant spike in inflation became the basis for the Fed to start tapering. He predicted that the inflation in the country will be increasing by 4% up to the end of this year.

Then it may decline to the level of 2% for 2022 and 2023. On the other side, he also see that there is a possibility that the inflation can move higher in the future. There is another thing. 

It seems that the market risk is fading again. The concern about the coronavirus is becoming a beneficial thing for the USD position as one of the safe haven currencies. 

Several dynamic things happened lately really support that currency. The continuous economy recovery is still facing some challenges because the consumers are quite careful. 

The Good Relation between US and China

The risk evasion is mostly done because of the high COVID-19 case from the vaccinated countries such as Singapore and the United Kingdom. Meanwhile, China and USA bring then new thing. 

Joe Biden as the US president and Xi Jinping as the China President discussed through the teleport on Thursday night. It was their first communication and contact since 7 months. 

Those countries promised to make a regular communication in the future. Responding to the news, the renminbi scored its fastest gain since the June period. 

The USD/CNY and USD/CNH currency pairs are confined continuously as a multi-year low below. They are below 6.5000 threshold. Other risk-sensitive currencies also get the benefit. 

Yuan Gets the Bullish Pressure 

Analysts welcomed the news. However, the yuan bullish pressure can be hard to maintain. Especially because the Fed's tapering discourse supports the appreciation of the US dollar.

Meanwhile, the China's tightening policy often causes the market upheaval. Market sentiment regarding the America-China relations could also deteriorate again.

It is especially if there is no further good news in the future. That discussion must be helping the short-term risk sentiment. The Yuan strengthening in the future depends on the USD movement. 

The signs to support the bilateral discussion in a more serious way may have a positive effect for Yuan and the regional currencies. However, the rooms for a progress may be limited.